Maximum code

Maximum code is the difference between stock-on-hand and the maximum order. For example, an inventory manager at a large machine manufacturer replenishing steel and controlling the quantity of steel purchased at any given time. The manager defines a reorder point and a maximum order point.

If the reorder point is 20 and the maximum order is 100, then when the stock-on-hand falls to 12, a reorder document is created to purchase 88. Eighty-eight is the difference between the stock-on-hand and the maximum order.